Tag Archives: ab1665

As expected, AT&T and Frontier Communications blocked broadband infrastructure grants in vast swaths of rural California yesterday, at least for anyone but themselves. The companies filed reports with the California Public Utilities Commission stating they weren’t giving up federal Connect America Fund subsidies in any of the census blocks they claimed in 2015.

Charter Communications tried a similar trick, submitting a letter telling the CPUC where it will be upgrading video-only analog systems to digital capability later this year. There are a couple of problems with Charter’s promises, though. First, it’s admitting it hasn’t complied with the CPUC decision that allowed it to buy Time Warner’s cable systems in California. In that decision, Charter was ordered to upgrade all of its analog territory to digital capability by November, 2018. That deadline has already passed.

Second, Charter is invoking “the spirit” of the right of the first night first refusal granted by the California legislature, but not accepting any of the hard responsibilities that go along with it. As a practical matter though, if Charter delivers on its most recent promise, it could be enough to preempt any California Advanced Services Fund (CASF) grants to independent Internet service providers in its remaining analog service areas.

This right of first refusal for incumbents, and the additional privileges granted on top of it to Frontier and AT&T, were included in assembly bill 1665, which was passed by the legislature in 2017. The bill set aside $300 million for CASF infrastructure grants, and gamed the rules to make it easier for AT&T, Frontier and other incumbents to get their hands on it, but harder for potential competitors to qualify.

No other right of first refusal claims were distributed yesterday. Others might have been filed, but there’s no indication at this point that any were.

Last month, the CPUC restarted the program. The first batch of CASF infrastructure grant applications are due on 1 April 2019. We’ll find out then whether incumbents have left enough room for meaningful independent broadband upgrades anywhere in California.

California broadband policy will be in the same legislative hands in 2019. Senate and assembly leaders announced committee assignments for the new term, and the chairs of the committees that dealt with major telecoms issues over the past couple of years remain the same.

Miguel Santiago (D – Los Angeles) retained his seat as chair of the assembly communications and conveyances committee. He didn’t make it into the top ranks – no leadership post or a seat on the powerful rules, appropriations or budget committees. But he’ll be able to continue to keep deep pocketed patrons, like AT&T, Comcast and Charter Communications, happy. As he tried to do when he (temporarily) blocked senate bill 822 – the net neutrality law – last year.

Santiago’s principal wingmen are back, too. Evan Low (D – Santa Clara) and Eduardo Garcia (D – Imperial) are once again on the communications and conveyances committee. Besides backing Santiago when he gutted SB 822, Low has (unsuccessfully) carried a copper-killer bill for AT&T and Garcia turned the California Advanced Services Fund into a $300 million piggybank, also for AT&T as well as Frontier Communications and cable companies. Garcia kept his seat on the appropriations committee; Low moves up to chair of the business and professions committee. Jay Olbernolte (R – San Bernardino), who also opposed SB 822, is back as the vice chair of the communications and conveyances committee.

The assembly privacy and consumer protection committee remains in the hands of Ed Chau (D – Los Angeles). He’s already introduced a placeholder bill that is a likely vehicle for amending the new privacy law that he authored last year. It was passed in order to block a tougher initiative that was otherwise headed to the November ballot. How he responds to the mounting pressure to soften it from tech industry interests is a key question for the coming session.

California has more than $300 million available to subsidise broadband infrastructure, thanks to a law passed last year by the California legislature. Also thanks to that law, the rules governing who can get the subsidies and where it can be spent were rigged, with the aim of protecting telco and cable monopolies, and funneling money into their pockets.

It was up to the California Public Utilities Commission to rewrite the rules that subsidy applicants have to follow and that govern how broadband subsidy proposals will be evaluated and approved. Or not.

That process went on for nearly a year, with lobbyists for Comcast and Charter Communications, lawyers for AT&T and a hodgepodge of staffers for Frontier Communications working hard 1. to prevent independent, competitive Internet service providers from getting any money, 2. to make sure they had unimpeded access to it, and 3. to avoid any inconvenient restrictions on what they could charge or what level of service they could deliver to subsidised communities.

Yesterday, by a unanimous vote, the CPUC approved new rules that both stay within the narrow lines drawn by telco lobbyists California lawmakers and provide independent, community-driven projects as good a chance of being funded as the law allows.

This rewrite of the California Advanced Services Fund (CASF) program was led by commissioner Martha Guzman Aceves. Following the vote, she said the goal is to focus broadband infrastructure spending on the communities that need it most, and get it to them as quickly as possible…

This [decision] approved a framework towards meeting the regional goals, now, of 98% per consortia region – those are geographical regions throughout the state – to try to get more parity and access throughout the state.

The [decision] sets up a faster application review timeline, it sets up clear funding rules that allow an applicant to determine ahead of time how much funding an application is eligible to receive…

These new rules improve the accuracy of data, as well, used to determine eligibility. Over the years we’ve had many struggles here, in our decisions, about whether or not a community is served. And this provides much clearer rules to determine that.

The PD also prioritises low income areas, that are unserved and, at best, have dial-up service. The applications that serve these unserved low income areas will receive 100% funding.

The first application window for this new round of CASF infrastructure grants closes 1 April 2018.

The flurry of comments and rebuttals about proposed changes to California’s primary broadband infrastructure subsidy program – the California Advanced Services Fund (CASF) – resulted in a few changes, generally for the better. A revised draft decision was published yesterday, ahead of a scheduled vote by the California Public Utilities Commission on Thursday.

Comcast’s and Charter Communications’ lobbying front organisation – the California Cable and Telecommunications Association (CCTA) – was rebuffed in its attempt to open up proposed CASF-funded projects to an eternity of challenges.

The revised draft emphasises that “there is only one opportunity to challenge a project” by demonstrating that existing service in the proposed area meets the California legislature’s pathetic minimum standard of 6 Mbps download and 1 Mbps upload speeds. That single challenge period ends five weeks after an application is submitted. CPUC staff has two weeks to post the application on the commission’s website and then incumbents have three weeks to try to kill it, if they think it threatens their monopolies. The one exception is if area is added to the proposed project during the review process, and then only the new territory is vulnerable to attack.

The revisions also put some additional streamlining in the review process, which has dragged on for more than two years in some cases. Any request for $10 million or less can be approved by staff, without having to be voted on by commissioners. The first draft had a $5 million limit. Most of the projects proposed over the past few years would have been comfortably below the new limit.

Incumbents are also opposed to a low income subscription option. The draft would subsidise an additional 10% of project costs – the baseline is 60% – if a $15 dollar a month package is offered to qualifying low income household. The cable lobbyists were joined by AT&T, Frontier Communications and a group of small rural telephone companies in objecting to it. Again, all they got for their troubles was a clearer statement of what the CPUC expects in return for giving them taxpayer money: “the low-income service offering must be offered throughout the entire project area and must meet all of the CASF performance criteria”.

At this point, a favorable vote by commissioners on Thursday is looking more likely. Yesterday, the draft was moved to Thursday’s consent agenda, which means it won’t even be debated. Assuming nothing changes (a reasonable, if not completely safe, assumption) it’ll be automatically approved along with a couple dozen other items in a single, bulk vote.

Comcast, Charter Communications and other cable companies are demanding the right “to challenge each and every application” for broadband infrastructure subsidies from the California Advanced Services Fund (CASF). Their lobbying front organisation, the California Cable and Telecommunications Association (CCTA), made their perpetual litigation plans clear in a new round of comments on the California Public Utilities Commission’s plan to reboot the program.

Like the cable lobbyists, AT&T repeated many of it previous arguments in its comments. But it did make one statement about funding middle mile facilities that is both true and useful for developing economically viable broadband projects…

If a CASF applicant and middle-mile provider cannot agree on access rates, terms, and conditions through arm’s-length negotiation, that alone is evidence that the middle-mile provider’s proposed rates, terms, and conditions are not commercially acceptable for the project at issue, and that building middle-mile infrastructure is “indispensable” to the project.

Middle mile infrastructure that connects local, last mile networks to central Internet hubs, such as those found in Silicon Valley, is essential. Incumbents – AT&T included – have used their control over those choke points to keep broadband prices high and competitors out. The CPUC should subsidise more middle mile fiber construction whenever possible, but that money should come with the same strings attached to last mile projects: grant recipients should offer it on the open market at published rates.

Several other groups submitted comments, also mostly restating earlier positions. The North Bay North Coast Broadband Consortium weighed in for the first time, urging the commission to hold incumbents accountable when they exercise a right of first refusal but don’t build out, and to give priority to projects that offer faster broadband speeds than the pathetic 10 Mbps download/1 Mbps upload service that the California legislature agreed to subsidise.

Comcast’s and Charter Communications’ lobbying front in Sacramento – the California Cable and Telecommunications Association (CCTA) – doesn’t want the California Public Utilities Commission to require companies that receive broadband infrastructure subsidies to make any commitments about the prices consumers will be charged, or to offer an “affordable broadband plan for low income customers”.

The lobbyists also told the CPUC that it can’t limit Charter’s and Comcast’s right to charge “exorbitant prices” for middle mile connectivity and, in the process, block competition by independent broadband providers.

CCTA objected to a new rule that would allow streamlined review of middle mile proposals in “a situation where a provider…only offers service at exorbitant prices”. Their claim is that “affordability” has nothing to do with the “availability” of middle mile service.

Bullshit.

Middle mile service links a local broadband provider – aka the “last mile” – to a major hub, such as a data center in Silicon Valley, where interconnections between networks are thick and the magic of the Internet happens. If an independent Internet service provider wants to build a last mile network in a poorly served community, the middle mile connectivity problem has to be solved in way that makes economic sense. When incumbents, like Charter, Comcast, AT&T or Frontier, kill an independent’s business model by jacking up middle mile prices – as they are allowed to do – they are deliberately making that service unavailable.

CCTA also continued to argue for the right to perpetually and continually challenge proposed projects. Derailing project applications with late challenges, sometimes based on false claims, is a tried and true tactic that incumbents use to protect their monopolies in communities where 1. their service is poor, and 2. so are residents.

The cable companies have never liked the CASF infrastructure subsidy program, and they have handed bags of cash offered cerebral arguments against it to California’s lawmakers in largely successful attempts to cripple it.

CCTA’s comments are worth reading as a reminder of why the CASF program was created in the first place.

AT&T, Frontier Communications, Charter Communications and Comcast have to file reports with the Federal Communications Commission detailing where they offer broadband service, how fast it is and what technology they use. The California Public Utilities Commission uses that information, along with other sources of data, to determine if particular areas or communities are eligible for broadband infrastructure subsidies, via the California Advanced Services Fund (CASF) program.

The CPUC is rewriting the rules for those subsidies, as a result of the generosity of California lawmakers who rigged CASF so that big, monopoly model telecoms companies get a shot at hogging all the cash.

The availability data that those incumbents provide is of dubious quality. It’s largely based on marketing claims, and not on actual speed tests or subscriber information. The CPUC’s proposed new rules highlight comments that I drafted and filed in May on behalf of the Central Coast Broadband Consortium in which we called out, as an example, obviously false data that AT&T submitted about fiber to the home service.

The CPUC draft diplomatically attributes AT&T’s false reports to “miscoding”. We filed comments last week suggesting that this isn’t the time to be speculating on AT&T’s motives or possible excuses for giving the CPUC and the FCC bad information…

We did not attribute this false data to miscoding. AT&T has established “AT&T Fiber” as an “umbrella brand” which includes technology such as “the former AT&T GigaPower network” which does not, in all regards, meet the Form 477 definition of “fiber to the home or business end user”. It is reasonable to posit a connection between AT&T’s brand positioning and its Form 477 submissions.

The [proposed decision] properly notes that these errors have major consequences for the CASF program, because corrections are time-consuming for the Communications Division Staff, and errors cause confusion and frustration for communities and CASF applicants who must rely on the maps for eligibility decisions. Race contends that the Commission should take a more aggressive enforcement stance if data is consistently provided to the Commission that is erroneous and/or overstated by a particular existing provider. Providing erroneous data on coverage is a [CPUC rule] violation and should be treated as such.

The rule in question says that AT&T – and everyone else who does business with the CPUC – must agree “never to mislead the Commission or its staff by an artifice or false statement of fact or law”.

The arm wrestling over how California should manage its primary broadband infrastructure subsidy program – the California Advanced Services Fund (CASF) – is nearly complete. Ten organisations filed comments on a draft of new rules offered by commissioner Martha Guzman Aceves last month. The rewrite is necessary because the California legislature changed the way CASF is structured, giving incumbent telcos – particularly AT&T and Frontier Communications – privileged access to the money and another layer of protection from independent providers that propose to offer modern levels of broadband service to rural communities. Not surprisingly, AT&T and Frontier want the CPUC to make it easier for them to scoop up taxpayer money and harder for everyone else.

AT&T urges the commission to loosen the draft rules so it can get 100% subsidies for infrastructure wherever it wants – the CPUC’s draft would target low income communities and areas with nothing but dial-up service for full funding. The company also claims that it’s illegal for the commission to consider whether there are any existing subscribers in an area before deciding that it’s eligible for subsidies. A provider’s claim that it offers broadband service at particular speeds should be enough, AT&T argues.

Frontier added an amen to those prayers, saying in its comments that it “opposes setting specific criteria linked to funding levels” and that the commission should take its word for what service it offers.

Both companies also object to a requirement that they update the CPUC on the progress they’re making on federally subsidised broadband upgrades. The state law that they paid key lawmakers big bucks for convinced public-spirited legislators to pass gives them an exclusive right to Californian subsidies in those areas for a couple of years, if they actually do the promised work. How dare the CPUC ask them if they’re meeting those obligations?

A coalition of rural telephone companies – small, often locally owned incumbent providers that serve remote communities – echoed some of those comments. They, too, object to the use of actual subscriber data to validate marketing claims and to the requirement for a reduced cost plan for low income households.

The lobbying front organisation that pushes Comcast’s and Charter Communications’ agenda at the CPUC as well as at the state capitol also filed comments – I’ll have more to say about that on Monday.

There’s one more round of reply comments due next week, then commissioners will vote on the final draft. That could happen in a couple of weeks, at their next meeting on 13 December 2018.

The biggest, by far, broadband service and infrastructure program in the U.S. is the Federal Communications Commission’s Connect America Fund, which is handing out $3 billion – $590 million in California – over the next decade. It’s been paying that money to Internet service providers – mostly incumbent telephone companies – who promise to provide a minimum service level of 10 Mbps download and 1 Mbps upload speeds.

That standard is about to be raised to 25 Mbps download and 3 Mbps upload speeds for some telephone companies because, an FCC draft decision says, “we recognise that access to 25/3 Mbps broadband service is not a luxury for urban areas, but a necessity for all”.

Just so.

It’s good news, and the republican majority on the FCC deserves credit for putting it on next month’s meeting agenda: approval is a virtual certainty. It’s a big step in the right direction, but it’s not mission accomplished yet.

In its draft, released just ahead of the Thanksgiving holiday, the FCC proposes to offer additional money to telephone companies that fall under the “rate of return” rules, if they upgrade their broadband infrastructure to support the 25/3 standard. There are different scenarios for how they might qualify for the extra money, and doing so is largely optional – the FCC would still subsidise 10/1 service.

“Rate of return” telcos are those that are still regulated based on costs and a particular return on their investment. The two biggest telcos in California – AT&T and Frontier Communications – do not fall into that category. They operate under the newer and inappropriately named “price cap” rules that let them charge as much as they want for broadband service (there are limits on telephone service charges, but not so strict that it makes a significant difference). A third, mid-sized telco in the Sacramento area, Consolidated Communications, is similarly unregulated, as is CenturyLink, which serves a few dozen homes along the Oregon border in Modoc County.

Small, rural telephone companies are regulated by the California Public Utilities Commission under the “rate of return” rules, though, and the new FCC incentives would apply to them.

The FCC said its decision to begin raising the standard was “informed by our recent auction to award universal service support in eligible areas”. In that auction, ISPs submitted bids to provide a particular level of service in return for a particular subsidy, with higher speeds and better quality getting preferential treatment. According to the FCC, 99.7% of the homes and businesses getting subsidised service as a result will be able to get 25/3 speeds or better.

One bit of bad news could have been avoided. If the draft is approved, the CPUC will only accept applications for CASF infrastructure grants once a year, in April. That’s a victory for big, monopoly model cable and telephone companies over sound broadband development policy. Independent projects, proposed by competitive broadband providers and backed by local communities, don’t run on a timetable. Corporate planning departments and capital budgets can and do. It’s convenient for AT&T and Frontier to spend a year drawing up a wish list and submitting it all at once. Not so for a one off project designed to fill a gap in a community that isn’t affluent enough generate a sufficient return on investment for those incumbents, with or without a subsidy.

On the plus side, the proposed changes to the program offer hope for local projects – if you don’t bet you can’t win – that can slow dance to the CPUC’s beat:

The review and approval process would be streamlined. Projects requesting a grant of $5 million or less, and that meet other cost and regulatory criteria could be approved by staff, instead of having to go to a formal vote by commissioners.

A seemingly hard three week deadline is set for incumbents that try to block competitors by claiming they already provide service that meets the California legislature’s pitiful minimum 6 Mbps download and 1 Mbps upload speeds. In the past, the CPUC has allowed incumbents to disrupt application reviews through perpetual challenges – Frontier is a particular abuser of the process – leading to delays of more than two years and, in some cases, killing projects altogether.

Challengers will also have to submit hard, complete information about current service upfront, including information about actual customers who subscribe to it. But only one qualifying sub per census block could be enough to kill an infrastructure upgrade for everyone else.

Projects “in low income areas” or where the only terrestrial option is dial up service can be fully funded; projects elsewhere that meet certain criteria can get up to 80%.

Projects can include middle mile facilities if the applicant demonstrates “it requested specific data and/or transport services from a provider and that provider was not able to meet that request and offered no other alternative”. There’s good and bad in this particular language. It opens the door to meaningful middle mile upgrades, which are indispensable to broadband development. On the other hand, it calls out transport and data services – Layers 2 and 3+, in geek speak – but ignores dark fiber, i.e. Layer 1, which is the true choke point that monopoly model telcos like AT&T, Frontier and CenturyLink use to block competition.

Rules for the so-called right of first refusal – Jus Primae Noctis is a better description – have been tightened. It’s a legislative present to incumbents which allows them to block projects in an area by promising to upgrade service.

AT&T and Frontier will have to disclose plans for building out in federally subsidised areas, if they want to keep the gift of exclusivity lawmakers gave them after cashing their generous checks out of a profound commitment to public service.

Technical changes to the current rules are also proposed. A few requirements have been streamlined, others tightened up.

One can was kicked down the road. The “line extension” program approved by lawmakers, which was first proposed by Comcast as a way of laundering subsidies through customers in order to escape CPUC oversight, will be left to “a future commission decision”. Lawmakers set aside $5 million for grants to residents to pay for extending service to their homes.

The draft was released in time for a vote by commissioners at their final meeting of the year, on 13 December 2018. A delay until next year is possible, though.